Last week, Judge Lawrence O’Neill issued a preliminary injunction against California’s low-carbon fuel standard(LCFS). The LCFS program, which was originally ordered by former Gov. Schwarzenegger in 2007 and later approved by the California Air Resources Board(CARB) in late 2009, would cut vehicle emissions by 10 percent by 2020. Judge O’Neill believes that the LCFS ultimately discriminates against interstate commerce. His ruling reads in part, “California is attempting to stop leakage of GHG emissions by treating electricity generated outside of the state differently than electricity generated inside its border. This discriminates against interstate commerce.” CARB has said they will appeal the ruling and seek a stay on the injunction, as will other environmental groups. This is not a surprise, as the LCFS along with the state’s cap-and-trade program are two key policy initiatives for the state to reduce greenhouse gas emissions. It will be interesting to see if this ruling affects other states in their efforts to begin greenhouse gas reduction programs.

As the United Nations Framework Convention on Climate Change(UNFCCC) went into its final weekend of talks in Durban, South Africa, many doubted whether an agreement could be reached. However as the final hours approached there was an agreement reached that promised a “universal legal agreement on climate change as soon as possible, but not later than 2015.” A new group, the Ad Hock Working Group on the Durban Platform for Enhanced Action, was formed to begin work immediately on an agreement. The key to the agreement was getting both developed and developing countries to agree to it. Some of the other key parts of the agreement include:

• Green Climate Fund: It should be operational in 2012 as countries have already begin pledging to it. A 20 member Standing Committee was formed to oversee it. And a program to guarantee long-term finance was agreed to.
• Technology: the Technology Mechanism will become fully operational in 2012.
• CCS: under the Kyoto Protocol’s Clean Development Mechanism governments agreed to allow carbon capture and storage projects as part of the CDM. Guidelines reviewed every 5 years.

In March of this year, California’s roll-out of AB 32 hit a legal hold up which we blogged about here. The Plaintiffs in the case sought a petition for writ of mandate on a total of eight causes of action in regards to a 2008 Functional Equivalent Document (FED) alternative analysis under the California Environmental Quality Act (CEQA). Judge Goldsmith granted the Plaintiff’s writ of mandate on two of the causes of action in May of this year, requiring the state to further justify its selection of the greenhouse gas cap-and-trade market, in light of alternatives. Finding that the state had adequately justified its selection, on Monday, Judge Goldsmith issued his final ruling on the issue discharging the Peremptory Writ of Mandate, and he wrote in his decision that “respondents having demonstrated satisfactory compliance with the Court’s Peremptory Writ of Mandate.” With this legal hurdle now cleared, California can move forward with AB 32 and its cap-and-trade program.

Today, the California Air Resources Board(CARB) met to consider final adoption of a proposed cap and trade program that is part of the state’s implementation of AB 32. CARB approved the cap and trade program by a unanimous vote. At a public hearing in August, CARB reviewed and heard testimony on the Functional Equivalent Document(FED). CARB has now posted its response to the comments of the FED on its website, and reviewed them during today’s hearing. The cap and trade plan will cover 85% percent of California’s emissions. Beginning in 2013 the plan places emission allowances on California’s power plants, refineries, cement plants and other high polluting facilities in the state. Other facilities won’t be part of the program until 2015.

The cap and trade program will require polluters to buy allowances from the state. The allowances represent a specific amount of greenhouse gases per year. The allowances can be bought or sold in the marketplace. If a company has extra allowances, because they were able to reduce emissions, they are able to sell their allowances to companies that failed to cut emissions or in fact increased their emission levels. In order to allow companies to gradually get used to the program, 90 percent of the allowances will be free in the first years of the program. Companies may also purchase carbon offsets, which are investments projects that reduce greenhouse gases. Companies can use these offsets to account for 8% of their emissions reductions.

The new Corporate Average Fuel Economy(CAFE) standards were scheduled to be released at the end of this month, but yesterday President Obama announced that the new standards will be delayed until November. The new standards, which were agreed to in July by the White House and the automobile industry, would set the CAFE standard to 54.5 miles per gallon by model year 2025. The new rule was supposed to be released in a notice officially this Friday; however the rule is simply not completed according to administration officials. It is expected with the extra six weeks that the U.S. EPA, the National Highway Traffic Safety Administration(NHTSA) and the state of California will be able to complete the proposed rule and have it ready to be released in mid-November. There would then be a comment period on the proposed rule. The final rule would remain on schedule for a release in July 2012.

The Department of Energy announced late last week plans to distribute $14 million in funding to six different projects in an effort to improve technology at integrated gasification combined cycle (IGCC) power plants where carbon capture is used.  Secretary Chu said, “These new technologies will not only help reduce carbon pollution, they will keep America competitive, create the high-tech jobs of the future and drive down electricity costs for consumers.”  The goal of funding these projects is to promote the commercialization of IGCC with carbon capture by advancing the technologies, so they become more economical.  The six projects chosen, which will be managed by the DOE’s National Energy Technology Laboratory (NETL), are Electric Power Research Institute, Inc (Palo Alto, CA), TDA Research, Inc (Wheat Ridge, CO), General Electric Company (Houston, TX), Air Products and Chemicals, Inc (Allentown, PA), Reaction Engineering International (Salt Lake City, UT) and General Electric Company(Houston, TX). 

Citing the “importance of reducing regulatory burdens and regulatory uncertainty, particularly as our economy continues to recover,” President Obama has asked Environmental Protection Agency (EPA) Administrator Lisa P. Jackson to withdraw the draft National Ambient Air Quality Standards for ground-level ozone (smog), proposed in January of 2010.  Characterized as a victory for business, Obama’s request means that current smog standards will not be revisited until 2013. 

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The California Air Resources Board(CARB) held a board meeting today to review the Final Supplement to AB 32 and the AB 32 Scoping Plan Functional Equivalent Document. The ARB staff gave a presentation updating the current status of AB 32 implementation and also detailed the updated environmental analysis of alternatives to the scoping plan. The presentation reviewed the current progress of key measures already being implemented under AB 32, including: the low carbon fuel standard, SB 375, and the renewable portfolio standard.

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The state of Wyoming has challenged EPA’s rights to take over greenhouse gas permitting in the state. A federal court ruled that the decision should be made by the U.S. District Court of Appeals, so it will be transferred there rather than the Denver-based 10th Circuit U.S. Court of Appeals like Wyoming desired. Wyoming’s case focuses on the EPA’s state implementation plans(SIP’s) which calls for states to prove that they can oversee greenhouse gas emissions through their state air-pollution programs. The states that lacked this ability under their current SIP, must implement a federal plan or let the EPA take over. The DC Circuit court, which handles a number of regulation disputes, already has a similar case on its plate involving the state of Texas. As the court moves forward don’t be surprised if the cases end up being dealt with at the same time.

On Monday, the Department of Energy (DOE) issued more than $51 million in clean coal grants to  university, state and industry partners. One of the beneficiaries of the grant is the University of Kentucky, who will receive $14.5 million. The university will use its funding to test its clean coal technology at the 700MW E.W. Brown plant. The project’s main goal is to capture 90 percent of the CO2 emissions from the plant without increasing the cost of electricity by more than 35 percent. Other beneficiaries of the grants include Linde LLC (NJ), Neumann Systems Group (CO) and Southern Co.